Chris Kesterson, President of Debt Settlement Trade Association TASC Settles Charges by State

The Association of Settlement Companies, a debt settlement trade association, proclaims to be the watchdog of the industry and to “promote good practice in the debt settlement industry.” But I’ve got to ask myself, if TASC is so focused on working on behalf of consumers then way did the TASC President, Chris Kesterson, (seen left) just settle legal issues with the State of Vermont for violating the Consumer Fraud Act.

You would think that of anybody in TASC, that the very President would be very focused on staying out of legal trouble, but apparently, no.

Broken TASC Logo on TASC President's Own Site. LMAO

Debt Settlement America, Inc., a debt settlement company based in Dallas, Texas, has entered into a settlement with the Vermont Attorney General’s Office that will result in refunds and payments to the State totaling over $120,000. The Attorney General claims that the company violated state law by engaging in the business of debt adjustment without a license, and by failing to comply with the Vermont Consumer Fraud Act. This is the ninth settlement between the Attorney General’s Office and a debt settlement firm in the past year.

According to Attorney General William Sorrell, Debt Settlement America violated the Consumer Fraud Act by not following the State’s three-day right to cancel requirements and by failing to have prior proof to support online claims about the results it could achieve for consumers. Debt Settlement America’s website stated that the company could reduce consumers’ debts to “less than 50 cents on the dollar.”

Debt Settlement America entered into contracts with 25 Vermont consumers and charged 10 to 15 percent of the dollar amount of the debt placed with the company. Those consumers paid the company a total of over $69,000 in fees.

Under the settlement, Debt Settlement America must pay full refunds to all of its Vermont customers and $50,000 in civil penalties and costs to the State. In addition, the company will pay $2,000 to any Vermonter who was sued by a creditor after signing up with the firm, and will offer to complete, without charge, negotiations with the creditors of its Vermont customers. For more information on the settlement, consumers can call the Attorney General’s Office at (802) 828-5507. – Source

Frankly, I’m beginning to think that if the very President of TASC can’t keep his own debt settlement company in compliance then I’m not sure we can trust anything the organization has to say about, well, anything. It would be one thing if this was maybe the first time at the regulator party, but it’s not for Debt Settlement America. Click here for more past articles about them.

If you’d like to learn more about what TASC seeming has to really promote then you will be interested in reading these articles as well:

Let me summarize Jesse’s last post. Settlement, Credit Counseling and Bankruptcy are 3 very different solutions. One should not replace the other.

Settlement has been around for decades. Consumer settlement came about in the past 10 years. The fed never regulated these businesses, so the good followed any laws that they could find that seemed applicable. Others found that since there was no gaurd on duty they took advantage. The Fed has stepped in and rightly so. Good companies want real regulation so they can have a clear set of rules to abide by and model a business against. Many of these good companies are in TASC and USOBA, but not all.

3 or more years in business. This is great advice but make sure that the company is also SETTLING the debt. If the company is just an upfront sales service they are less likely to have a complaint be in their name, and have no record of delivering on their reduction estimates. Go with a company that has a license in your state and offers both the consultation, administration and settlement of your debt under one roof.

Credit counseling, Law Firms, Accountants and many other professions have had their fair share of bad players. This does not render their industries entirely corrupt. It is up to the consumer to do the research and confirm that a company is legit and legally licensed to help them. I believe within a year most of the bad players will be gone and Negotiation will become less risky when it comes to finding a reputable provider.

http://www.DebtGoToGuy.com Jesse Niesen

Hi Steve,

Interesting post here… Quite frankly it’s disturbing, but let’s not throw the baby out with the bath water.

It shocks me that Debt Settlement America did not follow the three day right to cancel. This is standard and included in enrollment paperwork for any reputable debt settlement program I have ever seen.

I’m also shocked they did not provide proof of accounts settled for less than 50%. Settling unsecured debts for “less than fifty cents on the dollar” happens EVERY BUSINESS DAY in America. I have proof galore from my own personal clients who have successfully settled their own debt, as well as those who enrolled in a program to have it settled for them. I receive “fresh” settlement letters from the law firm I refer my clients to for third party debt settlement on a regular, monthly basis.

I have decided to negotiate my own credit cards and have had success in 2 cards so far. Both are with MBNA. I negotiated $54,000 to $5400.00, however my credit report will read settled, MBNA would not put “paid as agreed” on the report. But I think it was a good deal anyways. Now I am using this as leverage to negotiate my other cards. Seems like the have to be 120 days past due before I can do this.

Thank you Anna

***

Anna settled for 10 cents on the dollar. This is exceptional, but settlements for less than half of the current balance are aveage for skilled negotiators.

The problem is not in advertising the truth: that consumer can settle their unsecured debt for less than half of what they owe.

Another problem I see is that “the baby is thrown out with the bath water” as pundits trash talk debt settlement and sway consumers into credit counseling or bankruptcy when settlement would have been a much better choice (with a reputable firm – admittedly hard to find.

Steve, for your readers who are considering debt settlement, here is an easy to follow method to choose a reputable firm who will deliver good results, and help consumers AVOID the majority of “bad” settlement companies (many of whom may be members of TASC).

The TASC Standard Disclosures are useful and a step in the right direction, but forget about TASC membership because it’s irrelevant…

How Can You Choose a Good Debt Settlement Company & Avoid a Nightmare?

Debt settlement is the fastest way to get out of credit card debt for the least amount of money and avoid bankruptcy.

If you are one of the millions of Americans struggling through financial hardships today, debt settlement may be your very best option to be debt free ASAP.

BUT…

(WARNING: This is a BIG “BUT”…)

Debt Settlement “Nightmares” & Scams Abound…

THOUSANDS of new companies have popped up in recent years, flooding the TV, radio and internet with promises to “cut your debt in half.” Most of these ads are simply generating “leads” to sell to one or multiple “bad operators” (who will gladly take your money in the form of upfront fees without ever delivering on their promises).

It’s gotten ugly as untold numbers of people have seen their financial hopes turn into financial nightmares. In fact, the debt settlement industry has become so bad, the FTC is stepping in to regulate.

Sadly, for the past few years, over HALF of my personal clients have come to me for financial help AFTER failing a debt settlement or credit counseling program (a very different option) because they simply made a poor choice based on biased or incomplete information given to them from the counselor / consultant / salesperson they “talked to” before enrolling. These shady salespeople are never around after the sale is made to take care of the poor people they’ve sold a bill of goods to, leaving them in worse shape than when they asked for help.

Are There Any Good Debt Settlement Companies?

Still, debt settlement IS a legal, ethical and moral option for consumers to get out of debt ASAP, and get your financial future back on track from a hardship situation. Typically, you are able to settle for 50% or less of your outstanding balance. So it’s true, you actually can “cut your debt in half” – Plus, monthly payments are often cut in half during the process, allowing consumers to quickly get out of debt and breathe again.

I work with consumers across the country every day to solve their debt problems, and refer my clients to debt settlement programs, as well as credit counseling agencies and bankruptcy attorneys nationwide (IF a good, old-fashioned “accelerated pay off” plan is not an option). I wish everyone could get out of debt through a “Total Money Makeover” as Dave Ramsey suggests (who I admire and strongly recommend), but the fact remains that many Americans are in too much of a financial hardship to even keep up with minimum payments, and paying significantly more than the minimums is simply not possible. If you find yourself in a similar situation with large amounts of credit card debt, please understand you are not alone.

If I can offer anything here, let it be these three simple “rules of thumb” to help you avoid being another casualty of the many bad debt settlement companies, because getting out of debt ASAP and getting your money earning interest for you instead of paying interest is ultimately most important for your financial future.

3 Quick-Tests to Choose a GOOD Debt Settlement Company and AVOID a Financial Nightmare:

Here are three simple things any consumer with an internet connection can do in two-minutes, or less, to avoid the majority of “bad companies” and find a good company “needle” in the debt settlement haystack:

(Yeah Haw!)

#1) Time in Business OVER Five Years?

According to the SBA, 90% of new business FAIL within their first five years. So why would you trust your financial future with a start up? Also, most debt settlement programs are 2-3 YEARS long, and you want to make sure you are with a good company who has a proven track record serving clients all the way through the programs they offer. Stack the deck in your favor and go with a company who has stood the test of time. This will cut out at least one thousand new debt settlement companies; the vast majority you will see on TV, radio and the web.

HERE’S HOW TO DO THIS:

Go to BBB.org and search any company you consider, and check their BBB Report for their “Original Business Start Date”. If it’s less than five years, especially if it’s only a year or two, then STOP considering the company and seek help elsewhere from a company with a proven track record.

#2) Excessive BBB Complaints?

Check this same BBB Report for complaints. A short time in business with a high number of complaints (especially unresolved complaints) is a sure sign of a financial nightmare ahead if you enroll with such a company. A good company should only have a handful of complaints. Hundreds or thousands of complaints is inexcusable and a major red flag that the company consistently fails to meet the expectations they set with their clients.

Here’s an example of two companies who pass test #1, but only one passes test #2:

FreedomDebt.com has been in business since Dec, 2002 with only one single, resolved complaint in its entire history:

“D” rating due to concerns with the industry (because of companies like the one below), not due to any concerns with the company itself. Keep in mind FreedomDebt.com is HUGE, with regular national exposure on TV Talk Shows and News programs.

Credit Solutions has been in business almost as long, well over five years, but there is a striking difference: their BBB report lists over 1,600 complaints (including unresolved complaints and government actions against the company):

The future does NOT look good for NON-attorney based debt settlement programs because, due to the bad operators who have harmed many consumers in recent years, the FTC is stepping in to regulate, as they should. Debt settlement companies who are not operating under a licensed attorney are subject to these looming FTC regulations, a major threat to the survival of these companies. I would NOT recommend my mother, so I wouldn’t recommend you either. Instead, choose a debt settlement law firm operating under a licensed attorney because they will not be harmed by these inevitable FTC regulations.

Note About Debt Settlement Fees

Much can be said about fees for debt settlement services, and that is another entire conversation. Just make sure your payments are NOT going entirely to fees during the first X number of months, and stay away from anyone asking for some kind of a large upfront fee. If a company passes the three tests above, then they obviously are giving their clients enough value in service and results to justify whatever fees they are charging, however they may structure the payments. If it were not so, then you would see excessive BBB complaints over time.

Final Thoughts About Debt Settlement…

By following these three simple rules, you are sure to quickly find a debt settlement company who has passed the test of time, serving its clients and delivering on its promises without excessive complaints, legally. After helping people get out of debt through debt settlement and all other debt relief options for over eight years, this is my best advice to “cut to the chase” with this debt settlement jazz so you too can “cut your debt in half.”

However, BEFORE seeking out a company to settle your credit card debt, get educated about how credit works and all options for debt relief to determine if debt settlement is really your best choice to get out of debt in the first place.

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